Hello, dear colleagues!
Today's article on the USD/JPY currency pair will begin with the fact that at the trading on November 8-15, the rate could not continue the upward movement and turned to decline. The instability of the price dynamics of the US dollar affected the observed currency pair. Given that the Japanese yen as a safe-haven currency, this is not surprising. As soon as market participants are embraced by at least some fears (mainly related to the risks of global economic growth), the currency of the country of the Rising Sun immediately begins to be in high demand.
Before proceeding to the technical analysis of USD/JPY, let me remind you of the latest macroeconomic reports from the United States. The volume of net purchases of US securities by foreign investors amounted to 49.5 in September, although it was expected that the figure will come out at the level of 20.4. But the total volume of purchases of US securities in September was extremely disappointing, minus 37.6, while the forecast was 35.9.
However, if five years ago this indicator was taken into account by the markets and influenced the dynamics of the US currency, in recent years, purchases of US securities remain without the attention of investors and are not being won back by the market.
Yesterday's economic calendar was very scarce, and important macroeconomic indicators were not planned for publication. Today, it is worth paying attention to data on construction in the USA.
At 14:30 (London time) – there will be reports on the volume of building permits issued and on the number of laying of new foundations.
At 15:00 (London time) – FOMC member John Williams will deliver a speech.
Before this, at 10:00 (London time), the eurozone will present the balance of the current account of the balance of payments of the ECB.
Not so hot events, but, as they say, we have what we have.
Now, according to the technical picture of the dollar/yen currency pair.
Weekly
As mentioned at the beginning of the review, the pair declined last week, with the opening price of the last candle being slightly lower than the closing price of the previous bullish one, resulting in the "Harami" model. In fairness, we must admit that this model is not always recouped by the market. However, "Harami" (or pregnant) is a reversal model of candlestick analysis and the chances of working it out increase when it appears at the end of an upward movement. In the current situation, this is what we see.
Another important point, in my opinion. The bulls in the pair could not close last week above 50 moving average, which indicates their weakness, which means the likelihood of a subsequent decrease in USD/JPY.
At the moment, the pair does show a downward trend, but not so pronounced yet. I think market participants are waiting for the FOMC minutes, which will be published tomorrow, November 20, at 20:00 (London time).
With a high degree of probability, we can assume that the minutes of the last meeting of the Open Market Committee will have a significant impact not only on Wednesday's trading but also on the results of the entire five-day trading.
At this point, we have to admit that the dollar/yen pair has a bearish attitude. If so, then we should expect a decrease in the support levels of 108.24 and 107.88. From whether these levels stand under pressure from the bears or not, it will be possible to judge the prospects of the instrument.
In the case of USD/JPY reversal up, the nearest targets will be 109.10 (50 MA), 109.28 (last week's highs) and at the moment, the key resistance around 109.50.
Daily
At this time interval, the pair was stuck near the Tenkan and Kijun lines of the Ichimoku indicator, as well as the 144 exponential moving average. I note that usually (in other pairs) I use 200 EMA, but for the Japanese yen, 144 EMA works better. So, the current resistance is provided by the Tenkan line, and the support is just 144 exponents. I believe that the breakdown of Tenkan or 144 EMA will depend at least on the short-term prospects of the quote.
However, just above the support level of 108.24 is 50 MA, which can "hedge" 144 EMA and provoke a rebound up, the prospects of which will depend on the reaction of market participants to the Fed minutes.
To summarize, the author's personal view of the currency pair in question is bearish. Therefore, I propose to consider the sales of USD/JPY after rising to the levels of 108.88, 109.07, 109.28. You can take a closer look at sales at higher prices near the price zone of 109.40-109.50.
In all cases, before opening positions, it is better to enlist the support of bearish candlestick signals on the daily chart or smaller timeframes: H4 and (or) H1.
I wish you successful and profitable trades!